Question

Nature of Uncollectible Accounts

The XYZ Corporation owns and operates hotels and casinos including the XYZ Grand and the Bellagio in Las Vegas, Nevada. As of a recent year, XYZ reported accounts receivable of $440,000 and allowance for doubtful accounts of $62,040 Patient Care manufactures and sells a wide range of healthcare products including Band-Aids and Tylenol. As of a recent year, Patient Care reported accounts receivable of $964,000 and allowance for doubtful accounts of $38,560.

Round all amounts to one decimal place.

a. Compute the percentage of the allowance for doubtful accounts to the accounts receivable for the XYZ Corporation.
%

b. Compute the percentage of the allowance for doubtful accounts to the accounts receivable for Patient Care.
%

c. Possible reasons for the difference in the two ratios computed in (a) and (b) include:

Answer 1

Ang Natwe Of Uncollectible Accounts a) Aus- The Percentage of the allowance for doubtful Accounts to the accounts Receivable for the xyz_Corporation% Computed : Given, Accounts Receivable of XYZ Corporation = $ 440,000 Allowance for doubtful Accounts = $62,040 Percentage of the allowance for doubtful Accounts to the Accounts Receivable 62.040 X 100 440,000 14.10 % X Hence the percentage of the Allowance for doubtful Accounts to the accounts Receivable! is 14.10% 6) Aus The Percentage of the allowance for doubtful accounts to the accounts receivable for Patient care. % Computed O Given, Accounts Receivable of Patient Care = $964.000 Allowance for doubtful Accounts - $ 38,560

So Percentage of the Accounts to the Allowance for doubtful Accounts Receivable _38,560 X 100 964,000 = = 4% Hence, the Percentage of the Allowance for Aus doubt w Accounts to the Accounts Receivable is 4 %. C) Ang) Possible reasons for the difference in the two ratios computed in (a) and (b) include: lllll (A) - (B2. 14.10% 4% - Ora 0.141 0.04 Difference - 10.10% or Differemu= 0.101 Aug Difference in the two Ratios is 10.100% OT 0.101